Treasurer Asked to Release Modeling on Capital Gains Tax Changes

Business groups have asked Treasurer Jim Chalmers to release modeling on the productivity effects of changes to capital gains tax rules. The groups argue the changes will reduce business investment and slow productivity growth. The government replaced the 50 per cent discount on capital gains tax with an inflation-linked discount and introduced a 30 per cent minimum tax rate.

It stated that these measures will encourage investment decisions based on economic factors rather than tax outcomes and will improve capital allocation across the economy.

The government presented the tax changes as part of a broader productivity package. It said the package includes permanent funding for the $20,000 instant asset write-off, expanded venture capital tax incentives, and loss refundability provisions. 2 billion in compliance costs each year and grow the economy by $13 billion annually over the longer term.

It also noted that existing small business exemptions from capital gains tax will continue.

Commerce and Industry chief David Alexander said the tax changes are expected to raise $40 billion more over a decade and will reduce business investment. He called for greater transparency on the expected impacts. Council of Small Business Organisations chair Matthew Addison said small businesses are already delaying investment decisions while awaiting final details of the new tax regime.

He said the changes will remove cash that businesses would otherwise use for hiring or infrastructure.

Zali Steggall has written to the treasurer asking what modeling was used to set the 30 per cent minimum tax rate. She noted the rate is high compared with other countries. AMP chief economist Shane Oliver said the capital gains tax changes could work against productivity measures in the budget.

He said the changes may bias investment toward large dividend-paying companies rather than smaller growth stocks. Treasurer Jim Chalmers did not respond to questions about the modeling used to support the government's productivity claims.